Franchising has become one of the most widespread, effective, and impactful entrepreneurial solutions in recent decades, offering real opportunities that have spread worldwide, including in Arab countries, which have become crowded with global brands in various fields.

Franchisor:

A franchisor is a natural or legal person who grants the franchise under the terms of the franchise agreement. This includes the main franchisor concerning its relationship with the sub-franchisor, who owns the trademark, operating system, or trade name and business models.

Franchisee:

The franchisee represents a natural or legal person who is granted the franchise under the terms of the franchise agreement. This includes the sub-franchisor concerning its relationship with the main franchisor, who is licensed to use the trademark and operating system for commercial purposes.

Franchise Agreement:

This is the legal framework that defines the nature of the relationship between the franchisor and the franchisee.

Franchise Model:

This is the method of managing franchise businesses as determined by the franchisor, including how the associated brand is presented and the franchisee’s obligations to adhere to it.

Types of Franchising:
The most common types of franchising are:

1.Business Format Franchise:
This type of franchise grants the investor the right to use the brand name and product. It is the most common and widely used franchise model worldwide. A prominent example is the famous McDonald’s restaurant chain.

2.Distribution Franchise:
This type of franchise grants the investor the right to distribute and sell products with a well-known brand, excluding technical support or marketing. ExxonMobil, a petroleum products distribution company, is one of the famous companies that grant this franchise.

3.Manufacturing Franchise:
This type of franchise grants the investor the right to manufacture the same products and resell them under the original brand name, with strict adherence to the original production standards. Nestle for food products and Coca-Cola for soft drinks are among the famous companies that grant this type of franchise.

Advantages of Investing in Franchising:
The main advantages of franchising include maintaining and stabilizing capital with rapid growth and lower risks. However, there are other benefits:

1.Benefit from the franchise network.
2.Experience is not necessary.
3.Lower operating costs and thus higher profits.
4.Advanced business models.
5.Support from the franchisor company.
6.Starting with a clear and ready-made business system.
7.Achieving sales from the first day of operation.
8.Customer base loyalty.
9.Ease of growth and financing.
10.Higher project value.
11.More profits.
12.Rapid growth.
13.Risk reduction.

Disadvantages of Investing in Franchising:

1.High initial investment.
2.High initial costs may require financing.
3.Possibility of conflict with the granting company.
4.Financial privacy may be lacking.
5.Regulations and conditions govern your branch management.
6.Limited freedom in project management.
7.Limited access to data.
8.High profit expectations may not be met.